TC does not see anything in other directories, so you will have to place the executable into the folder of the mod you wish to compile. If the XML file you are compiling references anything from the vanilla files, you will also have to have a full copy of the Transcendence.tdb file in the same directory as well (that's a guess based on behavior). TC will then add the XML file and any resource files referenced in the XML code to the output TBD file referenced in the command line.